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When Everything Is Media, What Is Media Worth?

Why the Market Has Strugged With New Categories of Ad Inventory

Note: Ian Shaffer and I are working some cosmic connection. I put a few words together for the blog last week and was surprised to see Ian working the same territory. Our sentiments seem to intersect nicely, albeit from different industry vantage points. My comments below speak to the explosion of impressions largely driven by social media, and the implications from a media value perspective.

The market has struggled to place value on social media as an ad vehicle, but with more than 30% of Internet traffic driven by social activities, a lot is at stake. This struggle is part of a larger media phenomenon that is raising significant new challenges for publishers and media professionals. Specifically, what is inventory worth, how do media channels compare and what creates premium value?

In the past 10 years, new categories of ad inventory have opened up as human activity has been digitized. I put them into five categories -- communications and self expression (social networks, e-mail, chat, photo and video sharing); commerce (shopping sites like Amazon, EBay); gaming (game platforms, virtual environments like Second Life, social gaming, etc.); reference (dictionary, health sites, wikis, etc.); service or utility (file sharing, even service environments like Comcast bill pay); and directory (search, maps). For the most part, these are new additions to traditional content or environmental media channels (TV, print, radio, outdoor). They've given marketers more options but created confusion around how to value and map the media landscape and achieve reach.

Let's think about the implications. First, more monetizable ad inventory will pressure media prices as a whole. This is a function of volume and the cost structure of emerging media platforms. Content and distribution costs are significantly reduced or eliminated in many new platforms. We are seeing this today with sub-50-cent CPMs on basic bulk inventory.

The market will continue to look at a few drivers to justify premium media value. First and most obviously, inventory that can be linked to sales activity will continue to find premiums. Reach, while not as important as it once was, will also drive demand. No brainers.

Media that creates (or is perceived to create) measurable brand value will be prized (note to self ... do not say "content is king "). Content's ability to create transitive value to brands and/or deliver proximity to elusive psychographic groups will remain important. Brands will demand integration to get closer to the content and value associated with it. Watch for more sophisticated analytical approaches to measuring -- and selling -- this premium content.

Much of the new inventory does not carry strong signals around purchase intent and will underperform as a direct response channel, just as we've seen e-mail inventory do in the past. Publishers will push to market this inventory to brand advertisers for its attention value and target it with demographic and interest data made available by social media.

Publishers and networks will have to work hard to package the mass of inventory that lies between these ends of the spectrum. If the value is not intimately connected to the transaction or the premium association, it will come from delivering measureable time with the brand. Advertising platforms that bring rich ad experiences (entertainment and/or utility ... content, video, games, interactivity, etc.), to the right consumer in a friction free way are the path forward. And it goes without saying, as impressions compete for advertising dollars, there will be an inevitable push for accountability. Watch for pricing to shift to demonstrable engagement defined by discrete interactions and time spent.

Marketers too, will have their work cut out for them to create experiences that consumers choose to interact with. This is about content creation, and it's hard to deliver and scale. Think portable media experiences, not banners or pop-ups.

Social media will be monetized and marketers will find ways of creating value in these new environments. It's just going to take a bit of time.